CT Communications 8-K CT Communications Increases Dividend and Announces Fourth Quarter and Full Year 2004 Results

Exhibit 99.1

CT COMMUNICATIONS PRESS RELEASE

For Immediate Release
March 17, 2005
Contact:
Jim Hausman
704.722.2410
Duane Johnson
704.722.3231

CT Communications Increases Dividend and Announces
Fourth Quarter and Full Year 2004 Results

CT Communications, Inc. (NASDAQ: CTCI) announced that it has increased its regular quarterly common stock dividend 43% to $0.10 per share. The new dividend, payable on June 15, 2005 to all shareholders of record at the close of business on June 1, 2005, returns to shareholders a portion of the profit improvements realized through the continued growth and profitability of the Company. “Our focus on expense control is paying off with the gains we achieved in operating and net income during 2004. This represents our second increase in dividends in the last twelve months, and we are excited to provide our shareholders a greater return on their investment in our Company. Our recently announced broadband initiative is well underway, and DSL demand is strong with over 2,000 new DSL subscribers added in the fourth quarter,” said Michael R. Coltrane, President and Chief Executive Officer of CT Communications, Inc.

Quarter and Full-year Comparisons
Results for the first three quarters of 2004 and for the fourth quarter and total year 2003 included herein have been restated as more fully discussed in the Company’s Current Reports on Form 8-K filed with the Securities and Exchange Commission on February 24, 2005 and March 17, 2005.

Results of Operations
Operating income for the year ended December 31, 2004 grew 10.3% to $23.6 million. The increase in operating income was primarily due to consistent revenue growth coupled with initiatives to contain operating expense. Operating revenue in 2004 grew 1.7% or $2.7 million to $163.7 million, while operating expense was flat at $140.0 million. Operating expense excluding depreciation for 2004 declined $1.4 million from last year. Net income for the year was $14.8 million compared to $21.4 million in 2003, which included a $9.7 million after tax gain on the sale of an investment. Excluding this

one-time gain, net income grew $3.1 million, or 27% from 2003. Contributing to this increase in net income was a $0.9 million decrease in interest expense primarily due to the reduction in debt over the past two years. Full year earnings per share were $0.78 compared to $0.61 per share last year, excluding the one-time gain.

The Company achieved strong revenue growth of $1.6 million or 9.8% in its competitive operations in the fourth quarter of 2004 compared to the same period last year. However, these gains were substantially offset by decreased revenue in the incumbent telephone company primarily driven by a reduction in access and interconnection revenue. Total revenue for the quarter of $41.5 million was flat with the fourth quarter of 2003. During the fourth quarter CT experienced significant customer growth in its Wireless and Internet businesses. The Company added 1,984 net new Wireless customers while adding 1,410 net new customers subscribing to digital subscriber line (“DSL”) service. This growth represented an 18% and 138% increase in net new Wireless and DSL customers, respectively, from the same quarter last year. Total Wireless and DSL customers increased 12% and 36%, respectively, from the fourth quarter last year. In addition, the Company experienced 29% growth in Greenfield customers and 8% growth in CLEC customers compared to the fourth quarter of 2003.

In the fourth quarter of 2004 the Company held operating expense flat compared to the same period last year due to the continued focus on leveraging owned network infrastructure and expense control initiatives. The Company reduced spending across several network and administrative categories, achieved a reduction in medical benefits expense associated with a decreasing rate of claims experience and successfully settled certain Wireless lease obligations in the fourth quarter of 2004. Though the Company was able to improve cost efficiencies throughout the organization, the operating expense reductions were substantially offset by a $0.3 million increase in depreciation expense and $0.4 million in Sarbanes-Oxley Section 404 compliance related expense in the fourth quarter of 2004. Total third party fees incurred in 2004 associated with this compliance project exceeded $1.0 million.

Net income for the fourth quarter of 2004 was $4.1 million compared to $4.4 million in the same period last year. The decrease in net income was primarily due to a reduction in other income (expense) driven by a $0.3 million impairment on certain investment securities and a $0.2 million reduction in investment income. Offsetting these reductions was a $0.1 million decrease in other expenses, principally interest. Fourth quarter 2004 earnings per share were $0.21 compared to $0.23 per share in the fourth quarter of 2003.

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Income tax expense in the fourth quarter of 2004 includes charges related to a tentative settlement of North Carolina Department of Revenue tax audits for the 1998 – 2000 tax years, as well as certain other disputed state tax matters. The Company advanced a payment of $4.5 million to settle all matters and believes the final agreement will occur before March 31, 2005. These charges were substantially offset in the fourth quarter by previous tax accruals related to this settlement and a federal deduction associated with the sale and disposal of the Webserve product line. Webserve was acquired in December 2000 and later combined into the Internet business unit to enhance the Company’s suite of data products by providing Web design and development services. The Web design and development product line was sold in the fourth quarter, which had no material impact on reported pre-tax income from continuing operations.

Results by business unit:

•	ILEC – (“Concord Telephone”)
	Concord Telephone’s operating revenue and income decreased to $23.1 million and $6.3 million, respectively, in the fourth quarter of 2004 compared to the same quarter in 2003. The decline in operating results was primarily due to a decrease in access and interconnection revenue of $1.3 million, a reduction in phone system sales of $0.3 million and lower line-related revenue of $0.4 million. Offsetting these revenue decreases was a $0.4 million increase in certain regulatory settlements. Concord Telephone ended the fourth quarter of 2004 with 112,916 access lines in service, a 2% decrease from the fourth quarter of 2003, and 84,773 long distance lines, a 75% penetration of access lines.
•	Wireless Service – (“CTC Wireless”)
	CTC Wireless operating revenue increased 22.4% to $9.0 million for the fourth quarter of 2004 compared to $7.3 million in the fourth quarter of 2003. Contributing to the increase in wireless revenue was a $0.4 million increase in customer recurring revenue primarily due to a 12% growth in subscribers and a $1.2 million increase in settlement and roaming revenue. Operating income for the quarter grew to $1.2 million with operating margin increasing to 13.7% compared to $0.3 million last year and a margin of 3.6%. Driving the increase in operating margin were the significant increases in settlement and roaming revenue coupled with the increasing scale of this business that held increases in expense to 9.6%. For the total year revenue grew 14.1% while expenses increased 7.8% with operating margin growing to 12.5% from 7.3% in 2003. CTC Wireless ended the fourth quarter with 43,213 subscribers.

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•	CLEC – (“CTC Exchange Services”)
	CTC Exchange Services’ operating revenue decreased 7.8% to $4.5 million for the fourth quarter of 2004 compared to the same quarter last year. The decrease in operating revenue was due to a $0.6 million decline in access and interconnection revenue primarily resulting from an FCC mandated rate reduction in June 2004. Partially offsetting the reduction in access revenue was a $0.2 million increase in line revenue associated with the 8% growth in customer access lines to 31,718 at December 31, 2004. Operating loss for the fourth quarter of 2004 was $0.2 million compared to an operating loss of $0.3 million for the fourth quarter of 2003. CTC Exchange Services ended the fourth quarter of 2004 with 23,723 long distance lines compared with 20,916 lines at the end of 2003.
•	Greenfield
	Greenfield’s operating revenue increased 24.0% to $2.2 million for the fourth quarter of 2004 compared to the fourth quarter of 2003. Operating loss for the fourth quarter of 2004 declined to $1.0 million, an 12.0% improvement from the $1.1 million operating loss for the fourth quarter of 2003. Depreciation expense for the quarter was $1.0 million compared to $0.7 million in the fourth quarter last year. Greenfield ended the fourth quarter of 2004 with 12,975 access lines and 6,877 long distance lines in service, which represented increases of 29% and 43%, respectively, from the end of 2003. For the total year 2004 Greenfield revenue increased 30.3% to $8.1 million while operating expense excluding depreciation increased only 3.9% to $8.7 million. The Company continued to focus on Greenfield opportunities that leverage Company owned network infrastructure to minimize the cost to add additional customers. As of December 31, 2004, the Company had signed 105 agreements, which in total represent a potential of more than 48,000 lines at the completion of the projects.
•	Internet & Data – (“CTC Internet Services”)
	CTC Internet Services’ operating revenue decreased 1.5% to $2.7 million for the fourth quarter of 2004 compared to $2.8 million in the fourth quarter last year. DSL revenue increased $0.4 million, but was substantially offset by decreases in revenue primarily from a continued decline in dial-up customers and a reduction in high-speed revenue associated with lower priced data solutions for business customers. Operating income for the fourth quarter was $0.2 million with a 7.9% operating margin. Total year 2004 revenue growth was held to 4.1% due to the continuing churn of low speed dial-up customers that somewhat offset the growth in DSL product sales; however, operating income before depreciation expense increased to $2.6 million, a 259.3% increase due in part to network efficiencies and lower personnel expense. CTC Internet Services

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ended the year with 13,887 DSL lines compared to 10,183 lines at the end of 2003, with over 1,400 net lines added in the fourth quarter. Dial-up accounts decreased 17% to 9,041 and high-speed accounts increased 11% to 606 at December 31, 2004 compared to December 31, 2003.

Future Period Guidance
Results for 2005 may be impacted, among other matters, by the timing and success of the introduction of cable telephony competition in the Company’s ILEC service area. In addition, the extent and impact that certain regulatory actions may have on the pricing of certain network elements that the Company purchases are difficult to forecast at this time. We currently expect operating results to approximate the following during these future periods:

•   1st Quarter 2005

•   Revenue of $41 to $42 million

•   Operating income of $5.2 to $5.7 million

•   Depreciation expense of $7.9 to $8.0 million

•   Consolidated earnings per share of $0.16 to $0.18

•   Capital expenditures of $6 to $7 million

•   Full Year 2005

•   Revenue of $164 to $168 million

•   Operating income of $20.0 to $23.0 million

•   Depreciation expense of $31.5 to $33.0 million

•   Consolidated earnings per share of $0.70 to $0.75

•   Capital expenditures of $29 to $32 million

CT Communications will host a conference call to discuss the results of the fourth quarter and full year 2004 on Friday, March 18, 2005 at 10:00 AM ET. You are invited to listen to the conference call that will be broadcast live over the Internet at www.ctc.net. If you are unable to listen during the live webcast, the call will be archived on the web site at www.ctc.net until March 31, 2005. Additionally, a replay of the call will be available until 6:00 PM ET on Tuesday, March 22, 2005 at 800-633-8284. Enter access number 21236029.

CT Communications, Inc. is headquartered in Concord, N.C. and is a growing provider of integrated telecommunications and related services to residential and business customers located primarily in North

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Carolina. CT Communications, Inc. offers a comprehensive package of telecommunications services, including local and long distance telephone services, Internet and data services and wireless services.

Certain statements contained in this press release are “forward-looking statements,” within the meaning of federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks, uncertainties and assumptions made by management about us, including, among other things, changes in industry conditions created by the Telecommunications Act of 1996 and related state and federal legislation and regulations, the impact of economic conditions related to financial performance of customers, business partners, competitors and peers within the telecommunications industry, the recovery of the substantial costs incurred over the past few years in connection with our expansion into new businesses, retention of our existing customer base and our ability to attract new customers, our ability to control pricing and product offerings in a highly competitive industry, the performance of our investments, rapid changes in technology, our ability to manage capital expenditures related to changes in technology, actions of our competitors, the impact of economic and political events on our business, operating regions and customers, including terrorist attacks and the finalization and completion of the audit of the Company’s financial statements and the assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31,2004. In some cases, these forward-looking statements can be identified by the use of words such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “intend” or “potential” or the negative of those words or other comparable words. These forward-looking statements may differ materially from actual events or results because they involve estimates, assumptions and uncertainties and should be viewed with caution. We undertake no obligation to update or revise any forward-looking statements, whether as the result of new information, future events or otherwise. Readers are also directed to consider the risks, uncertainties and other factors discussed in documents filed by us with the Securities and Exchange Commission, including those matters summarized under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2003.

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CT Communications, Inc.
Consolidated Statements of Income
(unaudited, in thousands, except per share amounts)

	Three Months			(Restated)
	Ended December 31,			Three Months Ended
	2004			December 31, 2003			% Change
Operating Revenue
ILEC Services	$	23,061		$	24,884			(7.3	%)
CLEC Services		4,538			4,922			(7.8	%)
Greenfield Services		2,239			1,806			24.0	%
Wireless Services		8,957			7,319			22.4	%
Internet & Data Services		2,724			2,766			(1.5	%)
Total Operating Revenue		41,519			41,697			(0.4	%)
Operating Expense
ILEC Services		16,784			16,808			(0.1	%)
CLEC Services		4,716			5,199			(9.3	%)
Greenfield Services		3,229			2,931			10.2	%
Wireless Services		7,726			7,052			9.6	%
Internet & Data Services		2,508			2,771			(9.5	%)
Other		620			844			(26.5	%)
Total Operating Expense		35,583			35,605			(0.1	%)
Operating Income		5,936			6,092			(2.6	%)
Other Income (Expense)
Investment, Equity Method		1,222			1,595			(23.4	%)
Gains, Interest, Dividends		529			391			35.3	%
Impairment On Investments		(340	)		—			(100.0	%)
Other Expenses, Principally Interest		(1,149	)		(1,235	)		(7.0	%)
Total Other Income (Expense)		262			751			(65.1	%)
Pre-Tax Income From Continuing Operations		6,198			6,843			(9.4	%)
Income Tax Expense		2,129			2,458			(13.4	%)
Net Income	$	4,069		$	4,385			(7.2	%)
Weighted Average Diluted Shares		19,006			18,859
Earnings Per Diluted Common Share	$	0.21		$	0.23

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CT Communications, Inc.
Consolidated Statements of Income
(unaudited, in thousands, except per share amounts)

	Twelve Months			(Restated)
	Ended December 31,			Twelve Months Ended			%
	2004			December 31, 2003			Change
Operating Revenue
ILEC Services	$	93,016		$	96,079			(3.2	%)
CLEC Services		19,123			19,681			(2.8	%)
Greenfield Services		8,108			6,223			30.3	%
Wireless Services		32,548			28,517			14.1	%
Internet & Data Services		10,885			10,461			4.1	%
Total Operating Revenue		163,680			160,961			1.7	%
Operating Expense
ILEC Services		65,856			65,830			0.0	%
CLEC Services		19,969			21,354			(6.5	%)
Greenfield Services		12,004			10,919			9.9	%
Wireless Services		28,472			26,423			7.8	%
Internet & Data Services		11,288			11,302			(0.1	%)
Other		2,448			3,696			(33.8	%)
Total Operating Expense		140,037			139,524			0.4	%
Operating Income		23,643			21,437			10.3	%
Other Income (Expense)
Investment, Equity Method		5,771			5,829			(1.0	%)
Gains, Interest, Dividends		1,463			16,269			(91.0	%)
Impairment On Investments		(1,834	)		(1,744	)		5.2	%
Other Expenses, Principally Interest		(4,806	)		(6,443	)		(25.4	%)
Total Other Income (Expense)		594			13,911			(95.7	%)
Pre-Tax Income From Continuing Operations		24,237			35,348			(31.4	%)
Income Tax Expense		9,480			13,570			(30.1	%)
Income From Continuing Operations		14,757			21,778			(32.2	%)
(Loss) From Discontinued Operations, Net Of Tax		—			(424	)		(100.0	%)
Net Income	$	14,757		$	21,354			(30.9	%)
Weighted Average Diluted Shares		19,007			18,808
Earnings Per Diluted Common Share	$	0.78		$	1.13

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CT Communications, Inc.
Consolidated Balance Sheets
(unaudited, in thousands)

			(Restated)
	December 31, 2004		December 31, 2003
ASSETS
Cash and Cash Equivalents	$	28,358	$	16,957
Accounts Receivable and Unbilled Revenue, Net		17,371		20,662
Other Assets		5,367		5,372
Current Assets		51,096		42,991
Investment Securities		5,190		7,518
Investments in Unconsolidated Companies		16,002		13,034
Property, Plant and Equipment, Net		207,949		211,521
Other Assets		50,395		47,621
TOTAL ASSETS	$	330,632	$	322,685
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of Long-Term Debt	$	5,000	$	—
Accounts Payable		6,822		6,250
Customer Deposits and Advance Billings		3,307		2,840
Other Accrued Liabilities		18,474		17,589
Liabilities of Discontinued Operations		604		1,072
Current Liabilities		34,207		27,751
Long-Term Debt		65,000		80,000
Deferred Credits and Other Liabilities		42,953		37,350
Stockholders’ Equity		188,472		177,584
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	330,632	$	322,685

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CT Communications, Inc.
Customer Information

	December 31, 2004		December 31, 2003		% Change
ILEC Access Lines
Business Lines		28,710		29,137		(1.5	%)
Residential Lines		84,206		86,401		(2.5	%)
Total ILEC Lines		112,916		115,538		(2.3	%)
CLEC Access Lines		31,718		29,490		7.6	%
Greenfield Access Lines		12,975		10,095		28.5	%
Total Wired Access Lines		157,609		155,123		1.6	%
Wireless Subscribers		43,213		38,458		12.4	%
Long Distance Lines
In ILEC		84,773		84,714		0.1	%
In CLEC		23,723		20,916		13.4	%
In Greenfield		6,877		4,806		43.1	%
Total Long Distance Lines		115,373		110,436		4.5	%
Internet Access Customers
Dial-Up		9,041		10,838		(16.6	%)
DSL Lines		13,887		10,183		36.4	%
High Speed		606		545		11.2	%
Total Internet Access Customers		23,534		21,566		9.1	%

Greenfield Projects

	# Of		Potential Lines		# Of
	Lines In Service		At Completion		Projects
By Year Signed
1999		1,451		1,536		2
2000		4,397		11,906		17
2001		3,296		13,577		32
2002		3,177		12,694		24
2003		525		4,846		18
2004		129		3,864		12
Totals		12,975		48,423		105
By Type
Mall		2,601		2,800		3
Single Family Homes		6,843		33,403		55
Multi-Dwelling Units		2,954		10,974		39
Business		577		1,246		8
Totals		12,975		48,423		105

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CT Communications, Inc.
Other Selected Financial Data
(unaudited, in thousands)

Capital Expenditures

				(Restated)						(Restated)
	Three Months Ended			Three Months Ended			Year Ended			Year Ended
	December 31, 2004			December 31, 2003			December 31, 2004			December 31, 2003
ILEC	$	6,431		$	3,407		$	16,204		$	13,280
CLEC		244			297			784			1,004
Greenfield		2,174			1,532			5,315			4,680
Wireless		325			142			2,229			757
Internet		296			480			1,380			2,434
Other		433			981			1,285			2,243
Total	$	9,903		$	6,839		$	27,197		$	24,398
% of Revenue		23.9	%		16.4	%		16.6	%		15.2	%

Depreciation Expense

	Three		(Restated)				(Restated)
	Months Ended		Three Months Ended		Year Ended		Year Ended
	December 31, 2004		December 31, 2003		December 31, 2004		December 31, 2003
ILEC	$	4,766	$	4,750	$	18,925	$	19,157
CLEC		421		629		2,309		2,550
Greenfield		1,035		689		3,274		2,515
Wireless		494		457		1,930		1,689
Internet		617		412		2,954		1,551
Other		339		412		1,378		1,404
Total	$	7,672	$	7,349	$	30,770	$	28,866

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